If you are considering investing in solar panels, there are several pieces of information that you need to take into consideration before finalizing your purchase. This article is meant to provide you with an outline of the major pieces of information that you have to gather while making the decision to buy or not to buy solar panels.
The first piece of information you need to know is how much capacity you need from your solar panels. This can be done by reviewing your electric bills for the last year. Typically, an electric bill contains usage information for the previous year so you don’t need to dig up a whole year’s worth of electric bills. You should see that when you plot your electricity usage, there is a natural wave function with usage increasing in the summer months and decreasing in the winter months. If this is the case for you, you should plan to have a capacity that is slightly higher than your average usage for the month. This way, you will be able to meet your average needs even on months that are plagued by clouds.
Once you have an estimate of the capacity you will need, consult with a solar panel installer in your area. They can give you a second opinion on the capacity you need and provide you with price quotes and information on incentives and rebate programs. When you know how much your system will cost and how much you will get from the government in incentives and tax rebates, you know what your initial investment will be.
The important part of this process is to figure out how long it will take to save enough money to make your initial investment worthwhile. This is called a break even point or your payback period. In order to calculate this, we need to figure out how much you will be saving. Suppose that you produce 75 percent of your systems’s capacity in a month. This won’t decrease your bill by 75 percent because your utility company charges you flat fees for service. You will need to multiply how much electricity you will save by the per kilowatt hour charge your utility company charges you. Once you do this, you will have an estimate of your monthly savings.
Take your initial investment and divide it by your estimated monthly cost. For this simple estimate, we are assuming that the increase in energy costs will cancel out the time value of money. The resulting figure will be the number of months that it will take you to break even. Divide this by twelve to see the number of years. This is your payback period. After this amount of time, your investment will start to make you money at the rate you estimated as savings per month.
If you are comfortable with this payback period, then you should definitely invest in solar panels as it will not only make you money but will also make the earth a better place.